Federal Withholdings/Exemptions - Tilted Forum Project Discussion Community

thebeat · 12-30-2004, 05:37 PM

A little background info...

I just turned 22...single and 2004 is the first year i've had a full-time job (salary) all year long. I claimed "1" for my federal exemption basically just claiming myself. The first question is, is claiming "1" a bad idea when tax time rolls around?

For instance my year end income was a little over 26k and I forked over 2633.00 in Federal Taxes roughly 10% of my total income. Im just curious also if I'll end up getting a very small refund or perhaps even having to pay in due to the "1" exemption.

Any insight would be great.

Thanks

DDDDave · 12-31-2004, 10:35 AM

It should work out about right.....meaning as you surmised, a small refund.

You are in the 15% bracket and with your standard deduction the amount you have paid already should cover the amount you owe.

You can go to irs.gov and download a form 1040EZ and figure it out pretty quick.

Good Luck.

Cynthetiq · 01-01-2005, 06:47 AM

I file single 0 even though I am married and can claim more.

I'd rather get the larger refund at the end of the year than get the more paycheck each week.

but dammit... I looked at my last paystub and I paid more in taxes than I have ever in my lifetime that it was almost as much as my first corporate salary. I know I'll get some of that back, but still...

I wonder how many programs and social subsidies evaporate if they would be harder scrutinized if people had to pay the tax bill upfront... I know I would.

DewMan · 01-05-2005, 04:30 PM

Quote:

Originally Posted by Cynthetiq

I file single 0 even though I am married and can claim more.

I'd rather get the larger refund at the end of the year than get the more paycheck each week.

but dammit... I looked at my last paystub and I paid more in taxes than I have ever in my lifetime that it was almost as much as my first corporate salary. I know I'll get some of that back, but still...

I wonder how many programs and social subsidies evaporate if they would be harder scrutinized if people had to pay the tax bill upfront... I know I would.

I used to be in your boat until I realized something: You're basically giving your money to the govornment to hold onto, then they give it back to you at the end of year - interest free.

If you can live without the extra money week-to-week, you'd be better off taking that extra money you're giving the govornment and invest it in something that gives you 10% back.

If you take $40 a week and invest it, that's roughly $2000 a year. That's the average refund people get if they get a refund. If you take your refund one year, invest it, then change your witholding to balance you out so that your refund is smaller (say $200), then take that $40 a week and add it to that account, you'd walk away with another $100-$200 per year in interest.

Just a thought...

gar1976 · 01-05-2005, 05:15 PM

I'm with Dewman. Smart money management says you want to pay in at 4/15, not get a refund.

But in answer to the original question, the tax withholding tables are designed to get you at least a small refund back.

Cynthetiq · 01-06-2005, 07:01 AM

I don't disagree with that thought....

I don't do well with having that extra money available to me, it won't get invested it will get spent. The discipline to save and invest is already being done, as is all merit increases no longer get included in spending. The extra $100-$200 I'd gather in interest would be great but the potential for pissing away a majority or a good piece of the intial $2000 isn't worth the risk.

IMO it's pretty much a wash.

Also, FWIW, my 3 91 day $3,000 CDs aren't making all that much. Again, the risk of spending the money far outweighs the benefits to me of the extra $100-$200, I'd rather conciously sacrifice going out/buying something

DewMan · 01-07-2005, 08:48 AM

Quote:

Originally Posted by Cynthetiq

I don't disagree with that thought....

I don't do well with having that extra money available to me, it won't get invested it will get spent. The discipline to save and invest is already being done, as is all merit increases no longer get included in spending. The extra $100-$200 I'd gather in interest would be great but the potential for pissing away a majority or a good piece of the intial $2000 isn't worth the risk.

IMO it's pretty much a wash.

Also, FWIW, my 3 91 day $3,000 CDs aren't making all that much. Again, the risk of spending the money far outweighs the benefits to me of the extra $100-$200, I'd rather conciously sacrifice going out/buying something

I hear ya. If it's in my pocket it's gonna get spent.

If you have any kind of direct deposit or some banks/investment houses have a system that automatically transfers money, that's the way to do it.

Sometimes I just check my checking account right before I get paid and see if I have anything extra and just transfer the extra out of there.

roderickpsu · 01-07-2005, 07:57 PM

From a purely financial point of view, it is best if you claim "0" and use the extra money each month to invest. Then you take out some of that investment at the end to pay your taxes. That way your money is working for you and not for the government. Of course, this only works if you are very budgeted and well behaved.

12-30-2004, 05:37 PM	#1 (permalink)
thebeat Insane Location: Deep South	Federal Withholdings/Exemptions A little background info... I just turned 22...single and 2004 is the first year i've had a full-time job (salary) all year long. I claimed "1" for my federal exemption basically just claiming myself. The first question is, is claiming "1" a bad idea when tax time rolls around? For instance my year end income was a little over 26k and I forked over 2633.00 in Federal Taxes roughly 10% of my total income. Im just curious also if I'll end up getting a very small refund or perhaps even having to pay in due to the "1" exemption. Any insight would be great. Thanks __________________ random

12-31-2004, 10:35 AM	#2 (permalink)
DDDDave Addict Location: Sarasota	It should work out about right.....meaning as you surmised, a small refund. You are in the 15% bracket and with your standard deduction the amount you have paid already should cover the amount you owe. You can go to irs.gov and download a form 1040EZ and figure it out pretty quick. Good Luck. __________________ I am just a simple man trying to make my way in the universe... "Go confidently in the direction of your dreams. Live the life you have imagined." - Thoreau "Nothing great was ever accomplished without enthusiasm" - Emerson

01-01-2005, 06:47 AM	#3 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	I file single 0 even though I am married and can claim more. I'd rather get the larger refund at the end of the year than get the more paycheck each week. but dammit... I looked at my last paystub and I paid more in taxes than I have ever in my lifetime that it was almost as much as my first corporate salary. I know I'll get some of that back, but still... I wonder how many programs and social subsidies evaporate if they would be harder scrutinized if people had to pay the tax bill upfront... I know I would. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

01-05-2005, 05:15 PM	#5 (permalink)
gar1976 Custom User Title Location: Lurking. Under the desk.	I'm with Dewman. Smart money management says you want to pay in at 4/15, not get a refund. But in answer to the original question, the tax withholding tables are designed to get you at least a small refund back. __________________ Blistex, in regards to crappy games - They made pong look like a story driven RPG with a dynamic campaign.

01-06-2005, 07:01 AM	#6 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	I don't disagree with that thought.... I don't do well with having that extra money available to me, it won't get invested it will get spent. The discipline to save and invest is already being done, as is all merit increases no longer get included in spending. The extra $100-$200 I'd gather in interest would be great but the potential for pissing away a majority or a good piece of the intial $2000 isn't worth the risk. IMO it's pretty much a wash. Also, FWIW, my 3 91 day $3,000 CDs aren't making all that much. Again, the risk of spending the money far outweighs the benefits to me of the extra $100-$200, I'd rather conciously sacrifice going out/buying something __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION! Last edited by Cynthetiq; 01-06-2005 at 07:28 AM..

01-07-2005, 07:57 PM	#8 (permalink)
roderickpsu Crazy Location: State College, PA	From a purely financial point of view, it is best if you claim "0" and use the extra money each month to invest. Then you take out some of that investment at the end to pay your taxes. That way your money is working for you and not for the government. Of course, this only works if you are very budgeted and well behaved.